Boris Johnson will today declare Britain has ‘nothing to be afraid of’ in pulling out of Europe – putting him dramatically at odds with David Cameron.

In his most powerful intervention yet on the European Union, the London Mayor says the UK would have a ‘great and glorious future’ if it set itself free from ‘job-destroying’ Brussels.

He will argue that if the Prime Minister’s hopes of renegotiating our relationship with the EU fail, we should consider leaving altogether and forging trade relationships with the rest of the world.

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Boris Johnson insisted Britain has 'all sorts of viable futures' which could include leaving the EU

Describing EU-inspired red tape as ‘back-breaking’ and ‘grinding’, he will claim our economy could surge if it leaves behind such regulatory burdens and enters into its own relationships with growing economies such as China and Brazil.

‘We have nothing to be afraid of in going for an alternative future, a Britain open not just to the rest of Europe but to the world,’ he will say. ‘If we get it right it’s win-win.’

Today’s speech will throw down the gauntlet to Mr Cameron, amid growing speculation that the London Mayor will return to the Commons as early as next year – from where he could make a bid to lead the party.

He has not yet named which seat he would like to stand in, but he is expected to come to a decision soon.

Mr Johnson has significant support on the Tory backbenches and grassroots and the speech will be seen as a significant challenge to Mr Cameron’s authority.

The Mayor’s position is a stark contrast to that of the Prime Minister, who has always said he wants Britain to stay in Europe.

Speaking yesterday during his phone-in on LBC Radio, Mr Johnson said: ‘There is a great and glorious future for Britain in Europe if we can reform it.

‘But there might also be a great and glorious future – and I’m sure there is a great and glorious future – for Britain as an open, outward looking economy that has great trading relations with Europe, but that starts to think about the rest of the world where you are seeing huge growth.

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‘People should not be paranoid and scared about that option. There is a lot of apprehension.’

Today Mr Johnson will endorse a report from his economic adviser which concludes that a British exit from the European Union would be better for the country than staying in an unreformed EU. The study, by banker Gerard Lyons, says that leaving the EU is ‘definitely a viable option’ and comes a ‘very close second’ to staying in a successfully reformed Union.

Mr Cameron has pledged a referendum on EU membership by 2017, following Brussels reforms including a crackdown on benefit tourism and the repatriation of a series of powers on justice and migration.

The Mayor is, however, understood to believe that Mr Cameron’s strategy will not guarantee success and that the UK may have to consider pulling out – the so-called ‘Brexit’ strategy.

I don't think there is any need to be afraid. I doubt the Prime Minister is afraid of any such thing

London Mayor Boris Johnson

He will say today that if the Prime Minister succeeds, he would be happy to campaign for a Yes vote in the referendum. But he goes on to praise a report by Iain Mansfield, director of trade and investment at the UK embassy in the Philippines, who calls for us to pull out.

Mr Johnson will say: ‘It is crucial to understand that if we can’t get that reform, then the second option is also attractive, that we follow something like the path set out by Iain Mansfield in his excellent Brexit paper and go for a new approach.

‘If we got it right, we could negotiate a generous exit, securing ... access to the Common Market – and they would have every motive to do such a deal, given the balance of trade is very much in their favour.

'And that combination of a lower regulatory burden and undiminished trade access would cause exports to boom, and the whole thing would be turbo-charged by new trading agreements with major partners such as China, Brazil, Russia, Australia and India.

‘With less red tape for business, and a more competitive tax environment, it has been persuasively argued that British GDP would grow by 1.1 per cent.’

Mr Johnson will say that instead of a Europe of ‘grinding harmonization and job-destroying regulation’, he wants to see a Europe of opportunity.

He is due to say: ‘That is the vision of David Cameron and a vision of Europe that is worth fighting for. And this is the crucial point – I think we can get there.

‘But if we can’t, then we have nothing to be afraid of in going for an alternative future, a Britain open not just to the rest of Europe but to the world, where we have historic ties and markets with vast potential for all the goods and services that originate in London – and will continue to do so under any circumstances.’

He said that at the moment, the EU is suffering from a ‘crisis of economic underperformance, and a related collapse of political trust’.

David Cameron, pictured today visiting a fish market in Portugal with his wife Samantha, wants to renegotiate Britain's membership of the EU before holding an in-out referendum

‘In spite of all the talk of the corner being turned, unemployment is stuck on 26.7 per cent in Greece, 25 per cent in Spain – and double that rate for young people in southern Europe.

‘Half an entire generation chucked on the scrapheap for the sake of a misbegotten political project that alas shows no sign of breaking up.’

He also said Mr Cameron’s immigration target of ‘tens of thousands’ of net migrants ‘made no sense’ due to the EU’s open borders. Instead, London requires a rigorous American-style system that discriminates on talent.

The Mayor said voters were ‘totally fed up’ with politicians’ promises to cap migration while overseeing a system that tells ‘Australian physiotherapists and New Zealand scientists’ to ‘push off’, while leaving unrestricted access to Europeans.

Last night a Downing Street spokesman said: ‘The Prime Minister has repeatedly made clear the EU status quo is not acceptable.

‘That is why he has committed to renegotiate a better deal for Britain in the EU and give the British people the final say in an in-out referendum in 2017.’

The study by Mr Lyons also says that London’s economy, currently worth £350billion a year, will continue to grow over the next 20 years – whether the UK leaves the EU or not.

If the UK stays in a reformed EU, the London economy could grow to £640billion and create an extra million jobs in the capital.

If the UK left the EU on bad terms London’s economy would still grow, but only to £430billion and with around 1.2million jobs lost.

But if it left and maintained good relations with the EU then London’s economy would grow to £615billion and see an extra 900,000 jobs created.